A contested Office of Justice Programs contract for federally mandated identity verification services has been hit with a second protest from the same vendor, agency officials told Nextgov.

The protestor, NikSoft, in fall 2011, already had challenged the award to competitor LS3 Technologies for software and labor to establish the required Federal Identity, Credential and Access Management program. FICAM is a governmentwide strategy for securing the computer logins and smartcard credentials of federal employees.

The federal government’s overpayment for tools to make fighter jets has led to a $15.85 million settlement between Lockheed Martin Corp. and the Justice Department, the agency announced on March 23.

While the defense contractor has not admitted wrongdoing, the payment resolves False Claims Act allegations, as the government alleged that Lockheed subcontractor Tools & Metals Inc., an aeronautics business tooling supplier, inflated costs for military aircraft tool orders for the government.

A private party can file an action and receive a portion of the settlement under the False Claims Act. In this case, two whistleblowers will split $2 million of the funds.

The Justice Department brought a civil suit against Lockheed and charged them for acting “recklessly.” Specifically, the government said that the contractor did not properly oversee Tools & Metal’s charging practices and mishandled information that revealed the deleterious pricing.

Stuart F. Delery, acting assistant attorney general for the Justice Department’s civil division, called Lockheed’s actions “troubling,” because of its failure to pursue the “validity of the costs submitted…,” according to the announcement.

Between 1998 and 2005, the subcontractor allegedly overinflated the prices of perishable tools, such as drill bits, cutters, router bits, reamers and sockets used in manufacturing F-22s, F-35s and other military aircraft made by Lockheed for the Defense Department. In December 2005, former Tools & Metals president Todd Loftis, pleaded guilty and was sentenced to seven years in prison for the scheme, according to the Justice Dept. announcement.

In late 2007, Lockheed Martin said the Justice Department notified it of the ongoing investigation into the billing practices of Fort Worth, TX-based Tools & Metal.

“At no time did we knowingly engage in any inappropriate billing, but in an effort to close the matter in a timely manner we have agreed to a settlement,” said Joe Stout, director of communications of Lockheed Martin Aeronautics, in a statement.

“As a result of the investigation, Lockheed Martin has taken steps to ensure that its oversight of the supplier management process remains vigorous and that applicable controls are uniformly applied. We remain committed to upholding the highest standards of ethics in every aspect of our business,” he added.

Lockheed Martin Corp., of Bethesda, Md., ranks No. 1 on Washington Technology’s 2011 Top 100 list of the largest federal government contractors.

Four federal agencies were issued subpoenas by the House Small Business Committee on Oct. 20 for not complying with the Small Business Act’s procurement policies, according to a committee staffer.

The departments of Justice, Agriculture, Treasury and State were summoned to appear before the the Small Business subcommittee on contracting and workforce on Nov. 1 to testify why they are in noncompliance.

At issue is the “structure” of these agencies’ Small and Disadvantaged Business Utilization Offices (OSDBU) and “the fact that they are not reporting to the agency head or deputy head,” wrote Darrell Jordon, house committee spokesman, in an e-mail to Washington Technology.

OSDBUs were conceived in 1978 with the purpose of having federal agencies set aside contracts for small and disadvantaged businesses. The Small Business Act also has requirements that agencies report their procurement activities with small and disadvantaged businesses.

Justice, Agriculture, Treasury and State were warned of their missteps and given a chance to remedy the situation after a June Government Accountability Office small business contracting report found seven agencies not in compliance.

Following that report, letters to agencies were sent by subcommittee Chairman Mick Mulvaney (R-SC). As a result, the Interior Department and Social Security Administration are now in compliance, and a third, the Commerce Department, was pardoned due to an administrative issue.

In September, agencies were reminded of their noncompliance by memo and a hearing was held on Sept. 15 by the subcommittee to examine the GAO report and the economic impact of noncompliance.

As part of the subpoena procedure, the four agencies must produce a number of documents, including paperwork relating to their small business procurement programs, attainment of small business goals or challenges to decisions not to restrict competition to small business between Jan. 20, 2009, and Sept. 30, 2011.

Too many federal agencies are insufficiently protecting against contractor fraud or incompetence by using the suspension and debarment process, the Government Accountability Office reported Thursday. Agencies with records of scant use of the practice should beef up dedicated staff and commit to greater use of the interagency committee designed for this purpose, the auditors said.

“Agencies that fail to devote sufficient attention to suspension and debarment issues likely will continue to have limited levels of activity and risk fostering a perception that they are not serious about holding the entities they deal with accountable,” William Woods, GAO’s director of acquisition and sourcing management, told a hearing of the House Oversight and Government Reform Subcommittee on Technology, Information Policy, Intergovernmental Relations and Procurement Reform. But “we need to keep the process informal to avoid red tape, because agencies need to move quickly to protect the government’s interest,” he added.

GAO examined the number of suspensions and debarments imposed under the Federal Acquisition Regulation of 10 major contracting agencies over five fiscal years. Most active were the Defense Logistics Agency, the Navy, the General Services Administration and Homeland Security Department’s Immigration and Customs Enforcement.

Agencies with little or no use of the procedure were the Commerce, Health and Human Services, Justice, State and Treasury departments, as well as DHS’ Federal Emergency Management Agency.

“The mountains of federal forms are frustrating” for many good contractors, said panel chairman Rep. James Lankford, R-Okla., “but certain contractors try to defraud, or are chronically poor performers. We need to find out why some agencies uncover the abuse and others don’t” so the government can enforce a process that “strengthens the integrity of overall contract system.”

The Defense Department has far and away the highest raw number of suspensions and debarments (1,616 over five years), but when viewed as a percentage of contracting dollars, as ranking member Rep. Gerry Connolly, D-Va. noted, the Environmental Protection Agency has a far higher rate.

HHS, Connolly and Republican members pointed out, did not post a single contractor suspension or debarment in the past five years, despite a 2010 budget that included $368 billion in grants and $19 billion in contracts.

GAO’s Woods said he was surprised by the numbers at HHS. His report does not recommend any new legislation on suspensions (which are temporary) and debarments (which are long term), but calls for the agencies deemed inactive to mimic the organizational approaches of the active ones. That means assigning full-time dedicated staff and resources, developing detailed implementation guidance, and promoting a case referral process.

In addition, GAO recommends that the administrator of the Office of Federal Procurement Policy issue governmentwide guidance to ensure that agencies are aware of the elements of an active suspension and debarment program and the importance of cooperating with the Interagency Suspension and Debarment Committee. Witnesses at the hearing suggested that many agencies lack full commitment to that panel, which was created in 1986.

Under the Federal Acquisition Regulation and a parallel set of rules for nonprocurement contracting, agencies are responsible for examining contractors and uncovering fraud or nonperformance and then posting the companies on the website of the Excluded Parties List System maintained by the General Services Administration. Contractors’ rights are supposed to be protected through established procedures for challenging the listing through a timely meeting with top agency officials and a “mini trial” in which they can present evidence defending their record.

Nearly 84 percent of suspensions and debarments are required by statute — such as past violators of the 1970 Clean Air or 1972 Clean Water acts — according to GAO, which focused its study on the 16 percent that are discretionary.

The agencies deemed inactive generally accepted GAO’s conclusions. Nick Nyack, chief procurement official at Homeland Security Department, said, “We get this. We’re going to get it right and will be a best practices agency in short order.” Under questioning, he said it could be done within three months.

Three months was also the estimate for making changes the members elicited from Nancy Gunderson, suspension and debarment official at HHS. She said the department had terminated numerous grants and contracts for reasons such as questionable scientific integrity. But HHS efforts thus far on the issue have focused on promoting an electronic desk reference, staff training and looking at other agencies’ procedures, she said.

Agencies considered models were represented by Richard Pelletier, a suspension and department official at EPA, who said his agency since 1981 has maintained a “robust” approach that involves two offices with full-time staff.

Steven Shaw, deputy general counsel of the Air Force, stressed the importance protecting contractors’ rights by having officials who aren’t in the procurement chain “examine evidence, not just the fact of an indictment.” He favors a carrot-and-stick approach that includes regular meetings with important contractors and not mandatory debarments. The overall dollar figures, rather than the number of suspensions or debarments, he added, might be a better metric on agency activity than raw numbers.

The federal government should consider suspending and debarring food service contractors who exploit invoice loopholes to overcharge the Agriculture and Defense departments, witnesses told a Senate panel Wednesday.

Agriculture Department Inspector General Phyllis Fong suggested threatening to prevent contractors from doing business with the government either temporarily (suspension) or over the long-term (debarment) to deter rebate schemes, in which companies that receive rebates from food manufacturers for large-volume purchasing leave them off invoices and pocket the difference. The IG has been investigating contractors providing food purchasing services for the National School Lunch Program since 2002, and has found omitting information on rebates to be a frequent issue.

Withheld rebates account for between 5 percent and 50 percent of the price charged to the school districts participating in the lunch program, John Carroll, assistant attorney general for New York, told the Senate Homeland Security and Governmental Affairs Subcommittee on Contracting Oversight.

“Every dollar that’s being lost through rebate schemes is a dollar we cannot use to feed our soldiers and our children who need nutrition,” said Sen. Claire McCaskill, D-Mo., chairwoman of the subcommittee.

Previous USDA audits found a service management company overcharged school districts more than $8 million through inflated invoices in 2003, and another company received $1.3 million in hidden rebates in 2005.

Agriculture’s inspector general is starting a new investigation this month to assess the effectiveness of the recommendations issued after previous audits.

Similar fraud occurs with contractors working with the Defense Department to provide food to soldiers serving overseas, witnesses said.

Public Warehousing Co. is reportedly in talks to reach a settlement with the Justice Department after allegedly violating its prime vendor contract with the Defense Logistics Agency, overcharging the agency for food costs by $8.5 billion in 2009.

Charles Tiefer, a former member of the Wartime Contracting in Iraq and Afghanistan Commission and a law professor at the University of Baltimore, suggested revising contracts to allow auditors more access and requiring companies to identify any rebates on invoices. Tiefer also recommended conducting a survey of contractors to determine the extent of rebate schemes.

McCaskill announced that the subcommittee intends to submit document requests to investigate the issue more. “I think there’s real money here if we pull this thread,” she said.